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THE STATE OF THE EUROPEAN UNION
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growing importance of the service sector, and
higher demand for leisure or culture services
that do not even exist at the moment. However,
nobody can accurately foresee the net impact
on jobs and social cohesion, particularly if tech-
nology fails to deliver the growth in productivity
that it promises (the thesis of one prominent US
economist) or if growth is concentrated in the
regions that are leading this new era while the
rest are left to languish.
Techno-pessimism?
Following Brynjolfsson and McAfee (
The Second
Machine Age
, 2014) we will consider the four
major variables of a society’s economic well-
being: per capita income, productivity, number
of jobs, and average family income. For several
decades following the Second World War, these
indicators all improved steadily in the developed
economies. The economy as a whole grew, and
there were also increases in the working popu-
lation, productivity, average income and GDP
growth, both in national and per capita terms.
There were, of course, times when economic
recessions caused downturns or periods of stag-
nation, but even during such periods the de-
clines were never dramatic and the indicators
generally continued to be correlated.
However, since the 1980s growth in median
incomes has been more erratic, with tendencies
towards stagnation. (Here, median income is
defined as the annual earnings of an individual
or family in the 50th population percentile, half-
way up the socio-economic pyramid.) Over the
last 15 years, this figure has actually fallen in
real terms. Once the effects of inflation are tak-
en into account, a household in the 50th per-
centile in the USA earns less than it did in 1998.
This phenomenon is not specific to North
America, with studies in Germany, Sweden and
Finland, and data from a number of other
European countries, telling a similar story.
However, in these countries that have seen
stagnation both in job numbers and in low to
middle incomes, the economy as a whole has
continued to grow as part of a general upward
trend driven by rising productivity. As a result,
income from work has accounted for an ever-
smaller share of the economy.
The question is: could this be at least in part
a result of the ever-increasing automation
which, with the appearance of the new tech-
nologies, is encroaching on economic activity
(with the resultant impact on jobs)? Very prob-
ably, although this is not the sole cause. There
are certainly other factors too, ones that are un-
related to technology and that are threatening
the salaries of the middle and working classes in
the countries analysed: these include economic
globalisation, imbalances as a result of migra-
tory flows that have not yet been addressed,
and the offshoring of manufacturing activities
to other countries.
This offshoring is one of the most visible ef-
fects of globalisation, and it is interesting to
note that the impact of automation is not lim-
ited to factories in the USA and Germany, but
will also extend to those in China, India and
every other corner of the planet. An example of
this was provided by the report by Taiwanese
news agency CNA on 29 December 2016, re-
garding the plans of Foxconn – which manufac-
tures iPhones and iPads for Apple – to automate
all of its factories in China, where the company
employs more than a million people. The plan
will consist of three stages, with the final goal of
complete automation, according to the director
general of Foxconn’s automation technology
development committee. Will this be an isolated
instance or is it a sign of the future for China’s